The Collapse of the EV SPACs: Another One Goes Bankrupt, Others on the Verge

I thought SPACs were some new thing but they are actually not. They just show up periodically to scam a new generation.

Unfortunately, SPACs are legal (so far) because they are a Frankenstein's monster made of legal body parts.

There's nothing illegal about creating a public company, no matter how stupid it is, if your finances are above broad. Financially, SPACs are as simple as a public company gets: practically take people's money and hold them in a big pot.

There's also nothing illegal about a public company acquiring or merging with a private one, although I believe this is the Achilles' heel of our current legal system: mergers generally don't require the same level of minute disclosures an IPO does.

Clearly, this is a regulatory arbitrage, just like a lot of our "innovations" in the past decade, fueled by a near zero interest rate. The way to move forward would be to take another look at our regulation and close the arbitrage. Otherwise, next time there's a low interest rate environment, I can guarantee you there will be another garbage SPAC boom.

While I'm not a fan of SPACs, I think this is going to far

> way for investors to dump a company with no real business model, yet, onto the unsuspecting public.

The "unsuspecting public" are people who bought a stock with full knowledge that they don't know what they'll end up owning. The "unsuspecting public" is a mischaracterization, people who invest in SPACs aren't doing so unknowingly.

SPACs aren't automatically part of the typical portfolio (like, say, the S&P 500). People who own SPACs went out of their way to buy them.

I completely agree with your other points, but we have to acknowledge that the victims of a poorly executed SPAC merger isn't your blue collar worker, it's people who sought out a highly speculative asset, and that's what a SPAC is.

> Even when someone knowledgeable in finance describes it to me on the surface, in layman's terms

Could you share the explanation in layman’s terms?

Wait, how are they almost at break even if they’re losing 32k per vehicle?

Why, with charging standards? It's not like we needed ford gas stations, Honda gas stations etc. For Tesla it made sense since they were the first movers, but I think everyone else will just rely on the infra provided by 3 or 4 big players

I think a more fundamental problem for these companies is the actual manufacturing of the vehicles. It's easy (relatively speaking) to develop a one-off prototype, it's much harder to scale that up to build 1000/cars/month for example.

Just because Tesla has a recharging network and a car company doesn't mean others need a similar setup. It's fine for them to be separate companies. Just make sure your car supports ISO 15118 Plug and Charge.

It may be the case that it is easier to get a return on investment on installing chargers than building cars. If you go down that route, you might want to strike deals with car companies and their dealerships to include setting up your charger network on cars when they are sold.

> Tesla is a given.

It most certainly is not.

> The old European and US car makers are however failing quite badly. What they produce is hot garbage

That's not what I've seen in the numerous reviews I've read. Plenty of others get reviews similar to those of Tesla both from reviewers and their owners.

Tesla has got by far the best charging network, and their drivetrain is top notch, but the car shaped object they put that drivetrain in is not great. The old car makers seem to be learning how to make good electric drivetrains faster than Tesla is learning to make the rest of the car.

> at a huge loss per car.

Aren't you jumping the gun a bit? It took Tesla 12 years from the time they started actually shipping cars to the time they started having profitable years.

Like it or not, ICE cars still rule, and given their prices and lack of serious used cars markets so far with adequate pricing its not changing soon (I mean every BMW car I've bought was 20-25% of the price of new and was >95% of the car, so far they lasted 11 years / 150k km without any issues, I am not going to waste more money on cars regardless of technology). So sales of traditional ICE car manufacturers in electric space is not so important, at least for now. Given how much we destroy earth by mining all EV stuff I don't consider this as eco-friendly technology neither, at least not yet.

Where I live (Switzerland) they don't plan to phase them out anytime soon. All EU goals will shift to later in future, everybody understands that, including politicians pushing for them.

Also, Tesla had some good momentum in the beginning but right now they are just another e-car manufacturer among many, say Porsche beats them on everything actually important in car (apart from price, but then we talk about premium brands). So I wouldn't bet seriously on its future, it can be stellar or can flop ie if EU subsidies dry up.

> The old European and US car makers are however failing quite badly. What they produce is hot garbage at a huge loss per car.

VW Group (VW, Audi, etc.) seems to be moving quite well into EVs, I don't understand how manufacturers with a huge know-how to manufacture ICEs could be taken as "failing quite badly" in a market that's barely 5 years in the mainstream. ICEs are much more complex machines to produce than EVs, battery tech is something that most automakers have gotten into.

I think it's still too early to call shots like that, Tesla is still holding on its almost-first-mover advantage but it isn't a given it will stay that way when the competition increases. And competition has been increasing quite substantially.